EU's unprecedented £417m punishment for Hungary

Hungary is to be stripped of Brussels funding aimed at Europe's poorest
regions and worth £417 million next year in punishment for breaking EU rules
on budget deficits, under a European Commission proposal.

Olli Rehn, the EU's economic and monetary affairs commissioner, said he was making an example of Hungary for its constant breaching of the budget deficit rules, and gave it until the end of the year to implement new austerity measuresPhoto: REUTERS/Francois Lenoir

The Commission demanded the penalty, which is "unprecedented" in the EU's history, on Wednesday - despite the fact that Hungary is not a member of the euro and 22 other countries are also in breach of European spending targets.

The sanction will hit Hungary hard in the midst of an economic slowdown and would lead to the cancellation of much needed roads, energy and environment infrastructure projects in the country's poorest areas, some of Europe's most deprived regions.

Hungary has denounced the proposal, which must be supported by other EU countries, as "unfounded and unfair" amid a series of rows between the Commission and the Hungarian government.

Last month the EU's unelected executive threatened Hungary with legal action over new laws said to restrict the independence of its central bank by making its officials swear an oath to the Hungarian parliament.

Olli Rehn, the EU's economic and monetary affairs commissioner, said he was making an example of Hungary for its constant breaching of the budget deficit rules, and gave it until the end of the year to implement new austerity measures.